Another Chinese city just dealt a big blow to Uber, Didi Kuaidi

BY Erik Crouch and Steven Millward

Representatives from China’s top three ride-hailing apps – Uber, Didi Kuaidi, and Yongche – were brought before Shenzhen authorities earlier this week for some bad news. The private-car hailing functions of the apps have been declared illegal in the city.

As has happened in cities in China before, the apps are accused of circumventing taxi licensing laws.

According to Sohu Business, Shenzhen authorities have alread investigated more than 150 cases of illegal vehicle use this year related to Didi Kuaidi, China’s most popular ride-hailing app. While Didi Kuaidi’s popular cab-hailing service seems safe from this crackdown, its private-car hailing functions (Didi Express and Didi Zuanche) are being targeted in Shenzhen and have already been completely banned in Beijing.

Uber China may be getting used to bad news by now – this year has seen its offices get raided in Guangzhou and Chengdu, and the company can’t even use WeChat these days.

Uber, Didi, and the lesser-known Yongche’s meeting with Shenzhen authorities seems to have gone about as one would expect: they have been given a set amount of time (not made public) to properly license their drivers as commercial taxi employees and register each driver with local transit authorities, or face severe fines. And the corporatations themselves aren’t the only ones at risk – South China Morning Post points out that the drivers themselves can face fines of between RMB 5,000 and RMB 20,000 (US$3,146) and could see their vehicles impounded.

This Shenzhen decision echoes what we’ve seen throughout China over the last year or so: taxi-hailing apps are ok, but apps that hail private vehicles are not. Even if those apps are backed by China’s biggest, most powerful companies like Baidu (an investor in Uber) or Tencent and Alibaba (co-owners of Didi Kuaidi).